Facilitating Digital Innovation through Employee Procurement Strategy in the Finnish Public Sector

Strategic human capital sourcing literature has been published for several decades, but how and to what extent sourcing strategies impact digital innovation outputs has been studied very little. This master’s thesis represents a research venture into that void. Specifically, this study focuses on how outsourcing, insourcing, and in-house outsourcing might impact a firm’s ability to produce continued digital innovation in the Finnish business space. The project features two major parts. The first section of the study consists of an investigation into the academic literature surrounding digital innovation, human capital sourcing, knowledge management, and corporate boundaries. This review will serve to inform the project and generate theoretical background for the rest of the study. Then, the second section of the thesis will feature a quantitative study that examines how human capital sourcing strategy, specifically with regard to temporary and part-time employment impacts the digital innovation outputs of a national economy. Twenty-two member states of both the Organisation for Economic Cooperation and Development (OECD) and the European Union (EU) comprise the sample that is evaluated in the empirical, quantitative analysis. The data relating to each sample aggregated for this project was collected from the OECD statistics database. Hypotheses, rooted in theory, were tested through linear regression modeling to determine the relationship between the independent variables of temporary employment, part-time employment, and job tenure less than three years, and the dependent variable, information communication technology (ICT) patent output. Testing the initial two hypotheses explores whether and to what extent there might be a direct relationship between temporary employment or part-time employment, respectively, and ICT patent output. Following the initial regression analysis, a multiple linear regression is applied to the latter two hypotheses where the same independent variables are once again evaluated, but with job tenure of less than three years added as a moderating variable in the regression model. Meanwhile, gross domestic product (GDP) per capita, total country employment, and year are all accounted for as control variables. The findings herein suggest that there does in fact exist a positive, significant relationship between part-time employment and ICT patent output, while temporary employment does not yield similar findings. Further analysis of the control variables and their impact on the regression models, however, indicates that temporary employment, especially when moderated by short-term job tenure, does in the macroeconomic context generate a positive, significant effect on ICT patent output. Furthermore, it becomes evident that part-time employment loses its significant impact upon ICT patent output when incorporating the interaction term between part-time employment and short-term job term. Key takeaways from this work demonstrate that both temporary employment and part-time employment facilitate greater ICT patent output; however, part-time employment combined with short-term job tenure does not provide the same findings. Additionally, the theoretical framework underscores the importance of ensuring that temporary or part-time laborers are included in the company structure and culture through strategic management directives. Finally, recommendations are provided to the partner organization sponsoring this thesis, the Finnish Digital Agency